Oil Falls 2%: Trump Appeases Greenland-Iran, US Stockpiles Explode
Oil prices fell about 2% to a one-week low on Thursday after US President Donald Trump softened his tone on Greenland and Iran—causing geopolitical risk premiums to rapidly deflate. Brent fell $1.18 (-1.8%) to $64.06/barrel, while WTI dropped $1.26 (-2.1%) to $59.36/barrel.
Sentiment worsened after Trump claimed the US would gain “total and permanent” access to Greenland through a deal with NATO. In Europe, the effects remain: EU leaders are preparing to reassess relations with the US after the tariff drama and previous harsh threats shook transatlantic confidence.
From the Middle East, Trump also said he hoped there would be no further US military action in Iran, though he cautioned that the US would act if Tehran resumed its nuclear program. The market interpreted this as a signal that supply risks from Iran (a major OPEC producer) were not as “hot” as yesterday—and that weighed on prices.
On the Russia-Ukraine side of the war, new hopes are emerging for a peaceful solution. Ukrainian President Volodymyr Zelenskiy stated that several security guarantees are beginning to take shape following the Davos talks, although territorial issues remain a major sticking point. If the war truly subsides and sanctions on Russia are eased, the market sees the potential for increased global supply—further pressuring oil.
Additional pressure comes from the United States: EIA data shows US crude oil stocks rose by 3.6 million barrels in the week ending January 16, far above expectations of 1.1 million barrels. This surge in stocks reinforces the narrative of "loose supply," especially since the report's release was delayed by a day due to the Martin Luther King Jr. holiday.
Beyond that, the Venezuelan issue is also contributing to market caution. The potential for larger Venezuelan oil flows—coupled with trade maneuvers and discussions about oil and gas regulatory reform—is seen as potentially increasing supply to the market. However, Aramco believes concerns about a global supply glut are exaggerated, as demand remains strong and global stocks are dwindling.
In conclusion, the combination of cooling geopolitical risks, hopes for a Russia-Ukraine peace deal, and a significant rise in US stockpiles has caused oil to lose steam, and the $60/barrel area has once again become a psychological magnet for the market.
Source: Newsmaker.id
